About Book Value Per Share Calculator (Formula)
The Book Value Per Share Calculator is a vital tool in finance and investment analysis used to determine the value of a company’s assets attributed to each outstanding share of its stock. Book value per share provides insights into the company’s net worth and can be compared to the market price per share to assess the stock’s relative value. The formula to calculate book value per share is:
Book Value Per Share = (Total Shareholders’ Equity – Preferred Stock) / Total Number of Outstanding Shares
Where:
- “Total Shareholders’ Equity” represents the residual interest in the company’s assets after deducting liabilities.
- “Preferred Stock” refers to the value of preferred stock, if any, issued by the company.
- “Total Number of Outstanding Shares” is the total count of shares of the company’s stock held by investors.
For example, if a company has a total shareholders’ equity of $10 million, no preferred stock, and 1 million outstanding shares, the book value per share can be calculated as follows:
Book Value Per Share = ($10,000,000 – $0) / 1,000,000 = $10
This indicates a book value of $10 per share.
The Book Value Per Share Calculator is used by investors, analysts, and financial professionals to assess the fundamental value of a company’s stock. It provides insights into the company’s financial health, asset base, and potential for generating value for shareholders. By comparing the book value per share to the market price per share, investors can make informed decisions about investing in a company’s stock.